Housing Prices May Become
More Volatile, Fed Report Says

By

Brian Blackstone

Updated Aug. 23, 2006 4:11 p.m. ET

WASHINGTON -- The rise in housing prices over the past decade "owes significantly" to falling inflation-adjusted interest rates and changes in the mix between rates and the "housing premium," which could mean more volatile home prices in coming years, according to a paper written by Federal Reserve economists.

"If the break we observed in 1997 proves to be permanent, we should expect housing prices to be much...